Lest we forget what drives Empowered Investor Network’s underlying belief that the stock market is a manipulated insider’s game strictly designed to separate you from your investing capital, let’s review five of the top scandals in recent years.
5. Worldcom – This immense company cooked their books to an incredibly stupid extent, recording operating expenses as investments in the company. Let’s savor that a moment. Operating expenses as investments in the company. The discovery of the completely bogus $1.3 billion profit in 2001 dropped stock prices from $60 a share to mere pennies, causing tens of thousands of people to lose money and their jobs.
4. Healthsouth – CFO William Owens ratted out his boss, Richard Scrushy, who was caught instructing employees to inflate revenue and overstate income. Scrushy also sold shares just before a major loss was announced. That’s a no no. Shares went from $20 to pennies over one trading session.
3. The Pattern Daytrader Rule – After the internet bubble popped, the SEC, in collusion with major brokers who were getting their heads handed to them by the likes of E-Trade and Ameritrade, decided to try to stop small traders from using these discount brokers by instituting a rule you couldn’t trade more than 3 times in 5 days if you had less than $25,000 in your account. The Wall Street lords claimed it was to “protect people from themselves.” We know it was actually so the big boys could protect their retail business.
2. Enron – This company was once one of the 10 largest in the United States. Through an elaborate network of shell and offshore companies, they hid debt, multiplied earnings, and many company officials literally stole money in the process. The take down of Enron was widespread, ruining accounting firms, sending people to jail, and destroying the stock price. Thousands of people lost their entire retirements.
Yes, we did promise you five reasons to flee the stock market. There’s just one to go but it deserves an entry of its own. See you on the flip side.
